As a Boca Raton law firm specializing in estate, trust, and guardianship matters, we at Ellis Law Group have extensive experience in the area of fiduciary conduct. In these matters, it is the fiduciary who is the steward of administration, making all of the important decisions. We know that fiduciaries sometimes abuse their power or fail to understand the nature of their appointment. We know that fiduciaries do not always discharge their duties consistent with the letter or spirit of the law. And, unfortunately, we know that fiduciaries are capable of flagrantly disregarding their duties in the interest of personal gain.
The attorneys of Ellis Law Group offer a unique perspective in matters involving fiduciary misconduct because we know first-hand how to do things the right way, as our lawyers have been nominated and court appointed to serve as fiduciaries in a multitude of estate and trust matters. In addition, our lawyers have served as counsel in numerous cases involving allegations of fiduciary misconduct.
Because of the power afforded to fiduciaries by our law, often times we don’t see the actions or the consequences of a fiduciary’s conduct in real-time. Instead, something is discovered after-the-fact, often when an accounting is furnished, which evinces potential wrongdoing by the fiduciary. However, because of the wide berth given to fiduciaries, it is often the case that a fiduciary makes a decision that is met with disapproval but which does not, by itself, give rise to a claim for legal relief. In addition, Florida law provides that a litigant who sues a fiduciary for breach may be responsible for paying the fiduciary’s attorneys’ fees if the claim is unsuccessful. Accordingly, knowing how to identify actionable fiduciary misconduct is paramount.
Under Florida law, a personal representative is a fiduciary who must observe the standards of care applicable to trustees. A personal representative’s fiduciary duties—which Florida Statutes set forth in detail—include a duty of care, a duty of loyalty to the beneficiaries, and a duty to settle and distribute the estate in accordance with the decedent’s will and Florida law in an expeditious and efficient manner.
Serving as personal representative is a tremendous responsibility which most assuredly cannot be taken lightly. Having said that, the qualifications to serve as personal representative in Florida are somewhat minimal. A person need not be a lawyer, accountant, professional, college graduate or even a high school graduate. All that is required is that a person be mentally and physically fit, at least 18 years of age, and either be a Florida resident or a relative of the Decedent by blood or marriage. In addition, convicted felons may not serve. In some cases, the person appointed to be personal representative ultimately lacks the character and/or the competence to effectively and properly discharge the required duties and obligations of the job. This can result in waste, the squandering of assets, inefficient administration, and the accrual of unnecessary expenses and fees.
Under certain circumstances, a personal representative’s misconduct can only be remedied by his or removal and/or by imposing liability against the personal representative through litigation. A court will enter such relief as it deems appropriate in its discretion to ensure that the rights and interests of the estate and its beneficiaries are being properly served.
Under Florida law, a trustee is a fiduciary who owes a myriad of duties to trust beneficiaries. A trustee’s duties include a duty of care, a duty of loyalty, a duty of prudent administration, a duty to invest prudently, a duty to keep beneficiaries informed, a duty to account and a qualified prohibition on self-dealing. Trustees are afforded great authority and control over the assets of a trust and, in many instances, can make decisions which bind the trust without any court approval and without the beneficiaries’ consent.
Given the great power, responsibility, and complexity that inheres in serving as trustee, situations arise in which the trustee proves to be unqualified for the role or engages in conduct which constitutes a breach of the duties owed to beneficiaries. This can result in waste, the squandering of assets, inefficient administration, and the accrual of unnecessary expenses and fees.
While trusts are designed to be capable of administration without judicial oversight, Florida law provides for interested persons to seek relief from our courts in cases of breach of trust and maladministration. Depending on the circumstances, such relief can include the removal of the trustee, an accounting, and surcharge.
Of all the duties and obligations a trustee owes, the duty to account is perhaps the most tangible since it often involves the preparation and dissemination of a physical report. The Florida Trust Code provides that, regardless of a trust’s terms, a trustee must account to qualified beneficiaries on no less than an annual basis. This default rule cannot be modified by trust language to the contrary.
When this duty to account arises and when the accounting is “due” are both issues that can only be resolved with respect to the facts and circumstances of each individual case. Having said that, there are cases in which the trustee of an irrevocable trust has not accounted to beneficiaries for many years or at all. In these cases, an action against the trustee to compel an accounting may be appropriate. A recipient of an accounting may also disagree with the substance of the accounting: the accounting evinces egregious expenditures, legal fees, and fiduciary fees; the accounting does not identify all assets; or the accounting shows the imprudent investment of trust assets. Even when an accounting is timely furnished, the substance of the accounting may give rise to one or more claims for relief. Because accountings can be accompanied by notices which limit the amount of time a recipient has to seek relief, it is important that any questions about an accounting be timely brought to the attention of trusted legal counsel.
Like a personal representative or trustee, a guardian is a fiduciary. However, unlike a personal representative or trustee, a guardian’s powers are defined and limited by court order. A guardian is only empowered to exercise those rights which the court has determined the ward is unable to exercise. In addition, our statutes define what a guardian can and cannot do without court approval.
One of the guardian’s primary duties as fiduciary is the duty to account on an annual basis. When the accounting is filed and furnished to the ward and other persons entitled to a copy, the accounting may reveal impropriety by the guardian such as poor financial management, waste, or even theft of assets. When a guardian breaches its duty to the ward, the court has broad discretion to redress such breach and may order the removal of the guardian and may hold the guardian personally liable for any damages the ward sustains.
Interpreting and digesting the actions and decisions of a guardian is often a complicated process made more complex by the emotional toll that our concern for our loved ones takes on us. It is critical in evaluating a guardian’s conduct to assess the situation from a cerebral and objective viewpoint to determine whether something actionable has taken place.
Having served as fiduciaries, represented fiduciaries, and litigated against fiduciaries, the Boca Raton attorneys of Ellis Law Group bring a unique and well-rounded perspective to fiduciary litigation matters. We are available for consultation at your request.